Coal output at Indian state-owned mining companies declined in July

Coal output at the two largest state owned mining companies declined in July. This is due to the fact that the companies supplied coal of higher qualities to satisfy the new requirements for consumption at thermal power plants.

India’s largest state owned coal producer, Coal India reported coal output at 36.6m tonnes in July, down 7.6% m-o-m and down 0.3% y-o-y. CIL has failed to reach its monthly target by 1m tonnes. The lower output was affected by lack of environmental clearance to expand operations at South Eastern Coalfields Ltd. Poor weather conditions have also slowed output at two other CIL mines.

India’s second largest state owned coal mining company, SCCL, produced 4.4m tonnes last month, down 8.5% m-o-m but still was 14.9% higher y-o-y.

Coal India produced 331.8m tonnes over the Jan.-July period, up 6.7m tonnes or 2% y-o-y. Similarly, SCCL coal output increased to 37.7m tonnes during the period, up 2.6m tonnes or 7.4% y-o-y.

Based on the current data, we estimate that the Indian coal production will declined to 44.8m tonnes in July, down 9% m-o-m and down 0.4% y-o-y. However, despite the poor performance in July; Indian total coal output increased to just over 400m tonnes over the Jan.-July period, up 5.1m tonnes or 1.3% y-o-y.

In September last year, the Ministry of Power has dropped its pledge for Coal India to meet 1Bn tonnes coal output target by 2020 as the Indian economy is not yet ready to consume such a large amount of coal. Instead the state-owned mining companies are to produce enough coal to meet the demand at the domestic thermal power plants.